Govt plans to raise the EPFO wage ceiling from ₹15,000 to ₹25,000–₹30,000, expanding pension and PF coverage but cutting take‑home pay for many workers.
Govt plans to raise the EPFO wage ceiling from ₹15,000 to ₹25,000–₹30,000
The government is planning a significant change to the Employees Provident Fund Organisation (EPFO) rules to ensure that more workers are covered under India's social security net.
The current monthly wage ceiling of ₹15,000, which has remained unchanged since 2014, leaves many mid-income employees outside mandatory PF and pension contributions. With salaries rising steadily across sectors, officials believe it is time to expand coverage, increase retirement savings, and strengthen the corpus of EPFO funds.
The Centre is considering raising the mandatory wage ceiling from ₹15,000 to ₹25,000–₹30,000 per month, a move that will bring more workers under EPF and Employees’ Pension Scheme (EPS) contributions.
This proposal, if approved, could come into effect from April 1 and will significantly expand the reach of social security while ensuring that retirement benefits grow with inflation and rising salaries.
The Centre is preparing to raise the mandatory Employees’ Provident Fund Organisation (EPFO) wage ceiling from ₹15,000 to between ₹25,000 and ₹30,000 per month to widen the social security net for more salaried workers.
The proposal aims to include more employees under mandatory provident fund (PF) and pension contributions, especially those earning moderate salaries who are currently excluded because they earn above ₹15,000 a month.
At present, workers earning more than ₹15,000 in basic pay can choose whether to join EPFO, and many do not. Raising this cap would make it compulsory for workers earning up to the new limit to contribute to EPF and the Employees’ Pension Scheme (EPS).
The existing wage ceiling of ₹15,000 has not changed since September 2014, even as salaries, prices and minimum wages have risen significantly across India. As a result, many workers, especially those earning between ₹15,000 and ₹30,000, are currently not covered by mandatory PF benefits.
Critics say this reduces social security coverage and weakens retirement savings for a large segment of employees. Industry sources say the proposal could be tabled soon before the EPFO’s Central Board of Trustees for approval and, if cleared, may come into force from April 1.
A key reason this proposal gained momentum is a Supreme Court directive, which ordered the government and EPFO to revisit the ₹15,000 wage ceiling within four months as part of a public interest petition highlighting the exclusion of many workers from PF coverage.
The top court noted that the stagnant wage limit has created an “exclusionary” situation where many eligible employees do not benefit from PF and pension schemes, defeating the purpose of the law.
If approved, the higher wage ceiling will bring more workers under mandatory EPF and EPS coverage, expanding retirement benefits and boosting the overall corpus of the funds.
However, this will also mean higher contributions each month, which directly affects employees’ take‑home salaries. More deductions for PF and pension schemes will reduce disposable income for workers earning between ₹15,000 and the new ceiling.
At the same time, over the long run, workers will build a larger retirement corpus because both employee and employer contributions will be calculated on a higher wage base.
For employers, the wage cap hike means increased social security expenses and broader compliance requirements. Industry bodies had previously resisted changes, arguing that an increase in the cap should be accompanied by lower contribution rates, especially if employers faced a larger financial burden under the new rules.
With new labour codes already in effect that redefine wages and other benefits, businesses may feel additional pressure on profit margins from higher employer contributions.
Estimates suggest that increasing the wage ceiling to ₹25,000 could bring more than one crore workers into mandatory PF and pension coverage who are currently not included.
Labour unions have also backed a higher wage limit, with some pushing for a cap as high as ₹30,000 to reflect rising living costs and salary levels, especially in urban areas. Supporters argue that such a step would make retirement planning more inclusive and help millions secure a pension and provident fund benefits.
The proposal is under active consideration and could be discussed in upcoming EPFO board meetings. If approved, changes may take effect from the new financial year starting April 1.
Government officials and labour ministry sources have said the decision will be taken soon, given the Supreme Court’s timeline and the need to expand social security coverage for modern‑day wage realities.
A higher wage ceiling for EPFO coverage represents a major step toward broadening India’s social security net. Millions more employees will build retirement savings and qualify for pensions, helping improve long‑term financial security.
At the same time, policymakers and industry stakeholders will need to balance take‑home pay considerations with the benefits of expanded coverage—especially as the economy adjusts to changing wage structures.
